Corn and Beans Find Technical Support After a Rough Start to the Week

Grain Markets Struggle in Tuesday’s Trade
Grain futures were lower across the board, but has the market came down to far too fast? Check out yesterday’s recap and our thoughts on the price action after the close!

Corn

Tuesday’s Recap
Dec Corn futures finished the day at a one month low of 401’2 Tuesday, down by 7’0 or 1.71%. Combined volume came in at a one month high of 557,057, with the Dec maturity seeing a heavy 305,403 change hands. Total open interest finished the day at a one month high of 1,554,379, adding 24,035, or 1.57%. Dec open interest gained 12,086 (1.63%), to 753,818.

Technicals
Grain futures continued to roll over yesterday which took prices down into our 4-star support pocket from 397-401 1/4. As mentioned in recent videos and commentary, we see this pocket as a potential buying opportunity on the first test, whether that be short covering from Bears or Buying from Bulls. Where is that thesis wrong? A break and close below the low end of that support pocket opens up the conversation and the chart to a potential retest of the lows from August at 385.

Technical Levels of Importance
Resistance: 413-416, 425-426 1/2
Pivot:406 1/2-408 1/2
Support: 397-401 1/4****

Popular Options
Option volumes were largest for the Dec 420 call (6,660) and the Dec 400 put (10,212). Calls with the highest open interest are the Dec 430 strike (31,265), and for the puts are the Dec 400 strike (34,035).

Volatility Update
Corn implied volatility ended sharply higher as CVL rose by 1.2 to finish the session at 19.73. Up 0.51% to a one week high, historical volatility (as measured by the 30-day) ended the day at 17.70%. The CVL Skew closed the session sharply down, lower by 0.24 to end the day at a one month low of 0.16.

Fundamental Notes

• Weekly export inspections were reported at 430k metric tons, this was below the low end of expectations.
• Crop progress showed 47% of the US corn crop is harvested.

Soybeans

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Wheat

Tuesday’s Recap
Wheat futures were lower Tuesday with the Dec contract finishing the session at a one week low of 579’4, down by 5’6, in narrow trade. Across all maturities, the session saw 127,744 contracts traded, with Dec volume coming in at 69,756. Overall open interest closed at a one month high of 398,596, adding 3,655, or 0.93%. Dec open interest decreased by 1,706 (0.85%), to 199,527.

Technicals
The technical breakdown at the start of the week is continuing to weigh heavy on wheat prices in the overnight and early morning trade, this despite some minor strength in the corn and soybean markets. For those thinking that wheat and corn need to be correlated, this is your caution flag. There is minor support at 573 3/4, below that and we could see the selling accelerate down to 560 1/2-565 3/4. On the flipside, the Bulls need to see consecutive closes back above our pivot pocket from 582 3/4-584 1/4 to get the market back in a position to attempt another rally.

Technical Levels of Importance
Resistance: 596-600, 615-617 1/2, 629 1/2-634
Pivot: 582 3/4-584 1/4
Support: 573 3/4**, 560 1/2-565 3/4

Popular Options

Option trading centered around the Nov 610 calls with 1,442 changing hands and the Nov 580 puts with volume of 612. For Dec options, the 600 calls were the most active with 1,093 traded, and the high volume put was the 560 strike with 476 contracts changing hands. Calls with the greatest open interest are the Dec 600 strike (7,431), and for the puts are the Dec 550 strike (6,687).

Volatility Update
Wheat implied volatility finished the session moderately lower as WVL dropped 1.0 to end at 29.05, a one week low. Historical volatility (30-day) finished the session at 24.54%, dropping by 0.83%, to a one week low. The WVL Skew ended the day sharply lower, dropping 0.75 to finish at a one week low of 5.14.

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